STAND. COM. REP. NO. 1223

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: S.B. No. 1139
                                     S.D. 1
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Consumer Protection and Commerce, to which
was referred S.B. No. 1139, S.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO LIMITED LIABILITY COMPANIES,"

begs leave to report as follows:

     The purpose of this bill is to amend the Hawaii Limited
Liability Company Act of chapter 428, Hawaii Revised Statutes, to
conform with amendments made to the Uniform Limited Liability
Company Act adopted by the National Conference of Commissioners
on Uniform State Laws several years ago.  In addition to the
conforming amendments, the measure includes amendments that among
other things, are intended to:

     (1)  Repeal prohibitions against limited liability companies
          (LLCs) engaging in insurance company and financial
          institution activities as well as those of other
          professions and vocations, without affecting other
          statutory requirements regarding those activities;

     (2)  Extend the time within which an administratively
          terminated LLC may apply to the Director of Commerce
          and Consumer Affairs for reinstatement;

     (3)  Allow the one-step amendment and restatement of an
          LLC's articles of organization; and


 
 
 
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                                 Page 2

 
     (4)  Repeal provisions requiring that case law be applied
          when a party seeks to hold members of an LLC personally
          liable, a housekeeping measure that is not intended to
          affect underlying individual rights to "pierce the
          corporate veil."

     The Business Registration Division of the Department of
Commerce and Consumer Affairs (DCCA), and a concerned part-owner
of an LLC testified in support of this measure.  DCCA stated that
the conforming amendments to Hawaii's LLC Act were intended to
make Hawaii business law transparent to persons in states with
the same uniform law, thus making it easier to form LLCs in, and
encouraging the free flow of trade and commerce through the State
of Hawaii.

     Your Committee notes that this measure is similar to H.B.
No. 1077, H.D. 1, a bill your Committee heard earlier in this
session.  With the exception of a few nonsubstantive revisions,
both measures are identical.  Your Committee has amended this
bill by making technical, nonsubstantive amendments, including
the addition of Section 8 to the bill, which contains a technical
amendment necessitated by the bill's renumbering of paragraphs in
section 428-801, Hawaii Revised Statutes.

     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of S.B. No. 1139, S.D. 1, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as S.B. No. 1139, S.D. 1, H.D. 1, and be referred to the
Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Consumer
                                   Protection and Commerce,



                                   ______________________________
                                   RON MENOR, Chair